Disney and Pixar agree to stock deal

MOVIE MAGIC Disney pledged to maintain Pixar's unique creative character in a US$7.4 billion deal that would make Steve Jobs a director of Disney's board

AP , LOS ANGELES

The Walt Disney Co said that it is buying longtime partner Pixar Animation Studios Inc for US$7.4 billion in stock in a deal that could restore Disney's clout in animation while vaulting Pixar CEO Steve Jobs into a powerful role at the media conglomerate.

Disney's purchase of the maker of the blockbuster films Toy Story and Finding Nemo would make Jobs Disney's largest shareholder, with about a 7 percent stake. Jobs, who owns more than half of Pixar's shares and also heads Apple Computer Inc, will also join Disney's board.

"With this transaction, we welcome and embrace Pixar's unique culture, which for two decades has fostered some of the most innovative and successful films in history," Disney chief executive Robert Iger said in a statement on Tuesday.

Disney has co-financed and distributed Pixar's animated films for the past 12 years, splitting the profits. That deal expires in June after Pixar delivers Cars, and it had once appeared the companies would not renew it amid friction between Jobs and former Disney CEO Michael Eisner.

But the talks revived under Iger, who became Disney CEO last October. Disney, the theme park owner that also owns the ABC and ESPN TV networks, and Pixar had talked for months about a new relationship.

Pixar executive vice president John Lasseter will become chief creative officer of the animation studios and principal creative adviser at Walt Disney Imagineering, which designs and builds the company's theme parks.

Lasseter began his career as a Disney animator and is the creative force behind Pixar's films. He will report directly to Iger.

Pixar president Ed Catmull will serve as president of the new combined Pixar and Disney animation studios, reporting to Iger and Dick Cook, chairman of The Walt Disney Studios.

The two companies will remain separate, with Pixar staying in Emeryville and retaining its brand name. Maintaining Pixar's unique creative character was a priority in the talks, executives said.

"Most of the time that Bob and I have spent talking about this hasn't been about economics, it's been about preserving the Pixar culture because we all know that that's the thing that is going to determine the success here in the long run," Jobs said on a conference call with analysts.

Under the deal, Disney said it will issue 2.3 shares for each share of Pixar stock. At Tuesday's closing price of US$25.99 for Disney, Pixar shareholders would get stock worth US$59.78, a 4 percent premium over Pixar's closing price of US$57.57. The deal, which is subject to regulatory and Pixar shareholder approvals, was announced after the markets closed for the day.

With Pixar, Disney gains a company that has produced a long-running string of animated blockbusters. Iger wants to strengthen Disney's animated features, the hallmark of the company since its founding and a steady source of characters for Disney's theme parks and other units.

Pixar films have been a financial windfall for Disney, which receives 60 percent of the profits. By contrast, Disney's own animation unit has struggled.

With Jobs, Disney also tightens its link with Apple Computer, the innovative technology company behind music and video iPods.

Jobs could help Iger push his plans to marry films, TV shows, video games and other content to computers, iPods, handheld game consoles and even cellphones.